Closing Davos

7 February 2019 12:30pm

Warning to unethical leaders brings Davos to close

The World Economic Forum came to a close on Friday 25 January after a long week of deals and discussions in the snowy resort of Davos. You might expect the final session in Davos’ ‘SDG Lab’ to send participants home on a positive note. Instead, it came with a direct warning to the CEOs in the room: if you ignore ethics, you will lose your job. But a solution was offered: embrace CSR.

A new report into leadership and CSR was released by UNGSII (the UN Global Sustainable Index Institute) at one of the last events in the 2019 World Economic Forum. It was uncomfortable reading for the CEOs in the room because it found that the share of CEOs fired over ethical issues has significantly increased in the last ten years.

* From 2007-2011, ethical issues were given as the reason for 12% of all CEO sackings in that period.

* From 2012 to 2016, this number had risen to 26%.

The same trend was seen in every region of the world, to different extents. In North America the proportion rose from 5% to 11%. In Western Europe the figures grew from 11% to 19%. The biggest rise, from 12% to 52%, came in the BRICS countries. The message is clear: the cost for CEOs who ignore ethics is greater than ever before.

A solution: choose your own SDG adventure

The message to CEOs was not entirely gloomy, however. The report also found that if CEOs publicly commit to supporting the SDGs, and implement these promises, their reputation among investors, customers and media will be strengthened.

UNGSII analyzed statements from C-level executives in the world’s 500 biggest companies to identify those who mentioned the SDGs most frequently.

UNGSII also found that these firms received positive media coverage relative to rivals. “Associating the SDGs with the C-suite shows a considerable commitment that has high value in communications and media activities,” said the report. “This suggests these companies are likely to continue to grow their SDG commitments and are worthy of particular attention from investors.”

So, it is hardly surprising that more and more firms are promoting and implementing the SDGs. The same UNGSII analysis found that that over 85% of the largest 500 global corporations now disclose non-financial information like their SDG and environmental, social and governance (ESG) activity as part of their legally-binding annual financial report. Other findings in this analysis include:

* Pfizer, Inditex and Sanofi were the companies whose annual reports most often mentioned SDG 3 on health.

* SDG13 on climate action is by far the most likely to be mentioned in a major global company’s annual report. It was followed by SDG12 (responsible consumption and production) and SDG3 (good health and wellbeing).

* Danone, Cemex and Schneider Electric were the companies which mentioned climate action the most.

* Some SDGs were hardly mentioned by companies, including SDG14 on life below water, SDG1 on poverty, SDG2 on hunger and SDG10 on inequalities. “The extremely limited visibility of these companies showcases opportunity for companies who step forward,” said UNGSII.

* Firms in India, South Africa and the UK are most likely to mention the SDGs in their annual reports and in other statements. China, Canada and the US are the least likely to mention them prominently.

* In Germany, the companies giving the SDGs most prominence in their annual reports are Deutsche Telekom, BASF, Henkel, Bayer, BMW and Adidas.